DISTINCTIONS THAT APPEAL TO A BROAD AUDIENCE Example: American Airlines
After de-regulation of the airlines in 1978, many carriers quickly became mired in price competition and service cutbacks that shortchanged the mainstay of the airline business -the business traveler. Although American used frequent-flier coupons to attract pleasure travelers, the company decided the best way to hold regular prices firm and retain business travelers was to sell service, not prices. It pioneered a two-tier wage structure that held down labor costs, and still managed to stay at the top of the industry in on-time performance, safety and luggage handling. It’s advertising emphasized those statistics, along with the promise to coddle passengers with the best in-flight service possible. American’s market share grew without the company having to resort to cut-throat price competition that knocked some of its competitors out of the air.